Far North commercial skipper Tim Michalick lost $400,000 in an investment scam. He is speaking publicly to highlight flaws in the banking system and deficient customer protections. Photo / Jenny Ling
Far North commercial skipper Tim Michalick lost $400,000 in an investment scam. He is speaking publicly to highlight flaws in the banking system and deficient customer protections. Photo / Jenny Ling
Sitting in court just metres from the man accused of laundering his stolen $400,000, Tim Michalick felt disgust and “burning hot anger”.
“It was really stressful. I just can’t describe my hatred towards that person. In my opinion, he’s the lowest of the low.”
Michalick, 43 - a luxury yacht skipper based in Kerikeri - thought his family’s life savings were being invested in a low-risk term deposit with HSBC bank.
In fact his money had been sent to an account allegedly controlled by a disbarred Auckland lawyer who is now facing 11 money laundering charges and, if convicted, up to seven years in jail.
Michalick lost the money in January last year and realised he’d been scammed the following month. He said the last 13 months had been a roller coaster of emotions as he came to terms with the sophisticated fraud and tried to navigate a banking regulatory system which he compares to “Swiss cheese.
“This has ruined my f***en life. It’s been so hard and I’ve been on a steady decline since [being scammed]. It’s really turned my life upside down.
“I’ve got the court case coming up. I’m just struggling at the moment to be honest. I ran out of steam at the end of last year and I’ve been running off fumes.”
The Herald revealed Michalick’s story in an investigation last June. At the time he remained anonymous, concerned about the impact going public would have on his personal and professional life.
But Michalick now wants to tell his story openly due to frustrations about the banking sector’s accountability, the ability of criminals to target unsuspecting Kiwis through the country’s deficient payment system with impunity, and what he describes as a “flimsy” and ineffective Banking Ombudsman Scheme leaving some victims without hope.
“All the reasons why I didn’t go public initially still apply. But do I sit back and miss out on opportunities to tell New Zealand what’s going on, or do I go hell for leather to do my bit for all those poor people who are going to be taken advantage of?
“I would be doing the banks a favour if I didn’t come forward.”
‘Sick to my stomach’
Michalick sent his money from his ASB account to what he thought was a Kiwibank “cooling off” account set up under his own name - writing “HSBC term deposit” in the payment reference field.
After Michalick alerted the banks and police to the fraud, Kiwibank was able to recover about half the money. The rest was allegedly used by the suspected mule to pay private school fees or transferred to other accounts.
When the $200,000 was refunded, Kiwibank included the company’s name that received Michalick’s money. He Googled it to find the sole director was the disgraced lawyer whose career downfall had been reported by media.
Tim Michalick lost $400,000 to an elaborate scam. He is going public to help prevent other victims being taken in. Photo / Jenny Ling
He is still shocked this man was able to open an account and allegedly use it to conduct criminal activity without being detected by Kiwibank’s fraud security systems.
“The fact he was allegedly operating this long without any oversight from the bank makes me sick to my stomach.”
Michalick handed a dossier of information about the man to police but it took months for stretched fraud investigators to lay charges.
Michalick also complained to the Banking Ombudsman about why a supposed HSBC term deposit payment going to Kiwibank did not raise suspicions with ASB, and about what he believes was Kiwibank “harbouring” a mule account that was allegedly used to launder stolen money.
Banking Ombudsman Nicola Sladden says the rules governing her office prevent it from investigating recipient banks.
The Banking Ombudsman dismissed the complaint about ASB, ruling the bank was not at fault. Regarding Kiwibank, the Banking Ombudsman said its current remit prevented it from investigating the actions of receiving banks.
Deflated, Michalick sought a review, but the Banking Ombudsman declined to reopen his complaint this month.
He also complained to the Reserve Bank, claiming Kiwibank had breached anti-money laundering rules through alleged failures to check the customer’s background or monitor the account activity to prevent fraud.
However, the Reserve Bank found Kiwibank was not at fault.
Michalick told the Herald he believed the regulatory system was utterly deficient, with victims left to carry the blame.
“They’re allowing customers to operate without any scrutiny or restrictions on their banking activity and there’s no one I can turn to to hold them to account.
“My only option is to run a private civil case against Kiwibank which costs hundreds of thousands of dollars, and that just can’t be done.”
He believed the Banking Ombudsman scheme was “completely flimsy”. Though it was meant to investigate the banks, two major banks’ CEOs were board members and the banking sector helped draft the scheme’s terms of reference, Michalick said.
He claimed complaints weren’t assessed on a “fair playing field” and believed the scheme wasn’t independent or working to protect consumer rights.
Michalick said he had drawn strength from other victims who were brave enough to tell their stories publicly.
He also thanked the Herald for its coverage, which was a “driving force” in promoting change.
Kiwibank, Banking Ombudsman respond
A Kiwibank spokeswoman said it immediately froze the recipient account when alerted to the fraud and tried to recover funds.
Kiwibank had co-operated with the police investigation and was satisfied it completed all required anti-money laundering checks and that its customer “met the requirements”.
The spokeswoman said there was nothing about Michalick’s transactions to trigger the bank’s security warnings.
Banking Ombudsman Nicola Sladden said she had considerable sympathy for scam victims who often lost life-changing amounts of money.
She strongly refuted Michalick’s criticisms.
The scheme was an independent dispute resolution body which must apply the rules in force at the time of a complaint. Current rules did not require banks to reimburse authorised payment scam victims unless the bank had missed “red flags”.
“We do not make the fraud reimbursement rules. We apply them.”
Sladden’s office had repeatedly urged the Government to review fraud reimbursement laws and strengthen consumer protections.
She said a recent review found the scheme was “highly effective” and operated with “integrity and professionalism”.
The composition of the scheme’s board gave equal representation to banks and consumers, with an independent chair casting the deciding vote.
Sladden said shewas “deeply concerned” about victims’ money being laundered through domestic mule accounts.
But her office was not responsible for supervising the anti-money laundering regime. This was the purview of the Reserve Bank, Financial Markets Authority and Department of Internal Affairs.
Under its terms of reference, her office could not investigate complaints about recipient banks, as they usually provided no “direct service” to complainants.
Receiving banks could not share information about recipient account holders due to privacy laws.
Sladden’s office was considering a review of its terms of reference to consider complaints about payee banks, but this was “likely premature” until they had clear duties to scam victims, she said.
Lane Nichols is a senior journalist and deputy head of news based in Auckland. Before joining the Herald in 2012, he spent a decade at Wellington’s Dominion Post and the Nelson Mail.
